Companies such as Airbnb, HomeAway, VRBO, and others have made home sharing a go-to way for savvy travelers seeking to enjoy a more personal experience. For the homeowners, home sharing can be a fantastic way to generate some income from unused properties or rooms.Before you decide to rent your home, it is important to determine if you have the proper insurance coverage in place, or if additional coverage may be needed. You are, after all, inviting complete strangers to temporarily live in your house. Accidents do happen. Bad renters could entangle you in extensive damage repairs or worse, legal lawsuits.
Home Sharing DefinedSimply put, home-sharing is when you rent out your home or room within your home to paying guests on a short-term basis, usually less than 30 days. Renting your home can be done through one of the major home sharing websites such as Airbnb. Or rentals can be obtained through previously traditional methods such as bulletin board posting.Home sharing is extremely popular and growing at a tremendous pace. Renters are finding more comfort staying in homes and homeowners are finding a few extra dollars in their pocket. Consider the following statistics:
- 29% could imagine home sharing
- 25% of renters are college graduates
- 500,000 stays a night through Airbnb
- 660,000 home sharing listings in the US
- 2,000,000 people per night stay in an Airbnb
- 24% of renters Americans with incomes over $75,000
- Seniors make up the fastest growing Airbnb demographic
The market is ripe for renting your home. However, your homeowners policy may not be enough to protect you in case of damage or liability claims.
What’s At RiskAlthough your homeowners policy may cover you for a one-time rental, if you are regularly renting your property, you are effectively changing the type of property you own. In the eyes of the insurance company your home has become a rental property. Homeowners policies do not provide the necessary coverage you need to be protected.By reviewing your policy with your insurance agent, you will be able to determine what is and is not covered in the event of a claim. Further, your agent can advise of additional policies or extensions to consider purchasing. At the foundation of any insurance program is coverage for property and belongings.As a homeowner, your personal belongings are at risk from theft or damage. Since your property is rented, the likelihood of either increases. Review your limits of insurance carefully. Items you may not have consider insuring previously may now warrant coverage.Guests visiting your home normally are usually known to you. Further, guests are usually only in your home while you are present. When renting, however, you do not know who your guests are nor what they may be doing in your absence. Special coverage is available to extend liability coverage to protect you, your guests, and third parties who may be harmed as a result of renting your property.
Special ConsiderationsWe’ve reviewed the standard coverage requirements which serve as the foundation of a
policy necessary to insure home sharing properties. Digging deeper, there are very special coverage provisions which you need to ask your insurance agent about.Some of the special coverage provisions available may seem obvious. But others, such as infestation, are exposures unique to the home sharing homeowner. Ask your agent about the following options:
Infestation – This is a double-edged exposure. A renter could infest your home with pests such as bed bugs. Coverage may be available to cover the cost of remedying infested property. Further, having proper liability insurance will protect you should a new renter become ill before infestation was discovered.
Identity theft – When home sharing, renters could find personal information about you and your family during their stay which could be used to steal your identity. Coverage to recover and protect your identity is available on both standard homeowners policies and as an extension.
Loss of income – If your home is damaged by a renter and you lose the ability to rent the property during the time or repair, loss of income protection will replace income you would’ve otherwise earned.
Excess utility use – Renters can do a number on your utility bills. If a renter decides to cool your home to 50 degrees in mid-August or hold a neighborhood car wash, this extension allows recuperation of unexpectedly high utility bills.
Property of renters – Catastrophes such as fire do happen. Obtaining coverage for your renter’s property is highly recommended should one occur. This coverage makes your renters whole and can avoid possible lawsuits against you.
Liquor liability coverage – If one of your guests over serves alcohol or serves a minor, you could easily become roiled in a liability lawsuit. Don’t overlook this important coverage option.If you are looking to rent your home, you will need to look beyond your homeowners policy for adequate coverage. To learn more about home sharing insurance, contact the experts at demontinsurance.com at (800) 522-1997. Our licensed insurance experts will be happy to answer any questions you have.
